A Look Back on 2023 and Forecasts for 2024 with Rural Professional & Partner Tom Davies

The painted picture of the rural land and property market in 2023 differs somewhat in comparison to that of 2022. The continuing rise of the Bank of England’s base rate, now at 5.25% stands at its highest level in over 15 years in an attempt to quell rising inflation, has halted the elevated pre-pandemic demand for the residential, lifestyle properties in rural locations and slackened the marketplace. Despite this respite, it has provided a market of increased clarity as those buyers who are in the marketplace at present are motivated and largely well financed.

The demand for agricultural farmland remains high, with environmental motivations becoming more prevalent as the climate crisis deepens. The market is still somewhat underpinned by investors who can utilise the asset within tax planning and farmers who are looking to expand their current enterprises. It is, therefore, no surprise that the average value of GB farmland has increased, with prime arable land values increasing to £10,800 per acre by Spring 2023, £200/acre more than at the end of 2022. The largest increases were seen in the value of poorer quality pastureland, climbing by 13% in the last 12 months to £8,500 per acre. Wales experienced some of the largest growth, increasing by over 10%, demonstrating that natural capital and commercial agriculture focused opportunities are both in high demand.

Despite this demand, financing particularly large purchases at the current interest levels can be extremely challenging. As agents for the Agricultural Mortgage Corporation (AMC) we have seen this first hand, providing assistance to agricultural and rural businesses, and advising of affordability can at times, present difficult kitchen table conversations.

Nevertheless, 2023 has seen Morris Marshall & Poole present a large variety of agricultural and rural property to the market from small blocks of amenity woodland and pastureland to large well equipped commercial farms.

As 2023 ends, UK inflation sits currently around 4.6%, down from approximately 10% at the start of the year, and with inflation anticipated to fall further in 2024, real values for prime GB arable land are predicted to increase by an average of 2.5% per year and poorer quality pastureland by an average of 6% per year over the next five years.

There is no doubt that demands from investors and farmers will remain prevalent in 2024, particularly with forecasts of a lower inflation rate and Bank of England base rate. But with increasing environmental pressures from buzz words like natural capital, biodiversity net gain (BNG) and carbon markets will undoubtedly become an increasing factor in land values, particularly poorer quality pastureland.

If you require additional information about the services we provide, please don't hesitate to contact Tom using the details below.

 Tom Davies BSc (Hons) MRICS CAAV  

 Partner

 tomdavies@morrismarshall.co.uk

 01938 552371 / 07764 663193